FEMA: Conversion Of ECB Into Equity Shares:

An Indian Company is permitted to borrow overseas funds from "Recognised Lenders" under the RBI guidelines on External Commercial Borrowings (ECB). ECB is generally considered to be under Approval route since the agreement between the lender and borrower has to be submitted to the RBI to obtain Loan Registration number (LRN) before the funds can be utilised. Further various conditions like recognised lender, eligible borrower, repayment period, restrictions on end-use, ceiling on interest cost etc. has to be adhered to and complied with. The Indian Company is also required to file Form ECB-2 with the RBI every month reporting specified financial transactions taken place during the month.